The MEDC's
work is so carefully insulated from proper oversight it's an open question
whether such sloppy lack of due diligence is standard procedure. One
issue that should be on the docket is whether the MEDC's "compliance officer"
or other agency employees should lose their jobs for such a spectacular
misstep. More importantly, is this the only foul-up, or are their other
embarrassing examples just waiting for a careful investigator to lift the rocks
and see what scuttles out?

There
is so much money sloshing around economic development programs around the
nation — up to $50 billion or so as
late as 2004 — that it would be
surprising if there were not many questionable deals brokered by similar
agencies across the nation.

Consider
news reports out of Indiana that have exposed a yawning gap between some of
that state's "economic development" agency's celebrated job announcements and
the jobs actually created by the underlying corporate welfare favors. Tad DeHaven characterized the Daniels Administration as being engaged in "press-release economics":

The administration's political chicanery, however, has now come back to
bite it. A recent WTHR Eyewitness News investigation into IEDC shined a light
on the job-creation claims. When reporters tried to visit some of the companies
celebrated in IEDC press releases, they found empty fields, vacant lots and
deserted factories. According to the investigation, "as many as 40 percent
of statewide jobs listed as so-called economic successes have not happened-and
most of them never will." The governor told reporters that the IEDC's numbers
were audited.

Independently? That would be news to me. When I was a deputy director at
OMB, the governor's chief advisers ignored internal suggestions that the state
pursue the creation of an independent auditing agency along the lines of the
U.S. Government Accountability Office. The position of the IEDC director is
that no taxpayer money is being lost because his agency audits the companies to
make sure they fulfill the terms of their agreement with the state. The
director, however, has so far refused to release any details to the public that
would support this contention.

The key to restoring public confidence is
transparency and independent audits. The MEDC and the governor's staff have strong
political incentives to puff up the putative good news and bury the genuine bad
news. As I recommended last year, a routine audit should be
done of MEDC's job creation claims by a department with no dog in the economic
fight.

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